October 11, 2012

Combating the Foreclosure Crisis

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Overview

Mediation Program

Servicer and other outreach events

Enforcement Initiatives

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MEDIATION

PROGRAM

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Mediation Program

Nuts and BoltsEstablished by statuteAdministrative DirectiveEligibilityMediation is an automatic, opt-out program Conciliation style mediationProgram reliant on HUD approved housing

counselors to assist homeowners

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Mediation Program

Program is run by the Superior Court President Judge Vaughn is the point person in the Court Linda Carmichael is the liaison Sharon Agnew and other Prothonotaries are also involved

Delaware Dept. of Justice, Program Administrator Administers the day-to-day running of the Program and the

conferences

DVLS arranges for and assigns mediators Jacki Chacona is currently serving as the sole mediator

DSHA manages the mediation account and distributes reimbursements to housing counseling agencies and the DOJ

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Mediation Program

Goals of the new Mediation Program: Preventing unnecessary foreclosures Giving Delaware homeowners an opportunity to have

a meaningful conversation about possible non-foreclosure alternatives

Establishing a single point of contact with servicerHousing Counselors play a large role:

Assist homeowners with navigating the loan modification process;

Guide and support homeowners through the mediation conference; and

Spearhead negotiations with the lender and lender’s counsel.

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Foreclosure Timeline7

3-4 months behind Letter of Default

Notice of Intent to Foreclose (45 days before suit)

Foreclosure Suit filed

Service of Complaint by

Sheriff

Notice to Lien Holders for

posting

Mediation Conference Scheduled

Homeowner to meet with Housing

Counselor & complete COP

Homeowner submits

documents 14 days before conference

Lender submits checklist of

missing docs 7 days before conference

Homeowner files an Answer or responsive pleading

Appearance and participation in

mediation conference

Complete a Mediation

Record

Reduce any non-foreclosure

agreement to writing

Proceed accordingly

based on outcome of conference

Foreclosure Data8

New Castle Kent Sussex Statewide

2009 3828 1228 1562 6618

2010 3344 1055 1424 5823

2011 3778 936 1198 5912

2012 478 178 213 869

500

1500

2500

3500

4500

5500

6500

Foreclosure Filings by County

Num

ber

of

Case

s

Foreclosure Data9

January Feb. March April May June July August Sept.0

50

100

150

200

250

300

350

400

450

500Statewide Foreclosure Filings by Month 2012

SussexKent New Castle

433

15 19 37 55

73 57

77

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Mediation Program Statistics

136 eligible foreclosure actions, representing 24% of all foreclosure actions filed statewide since the inception of the program;

30 homeowners have filed certificates indicating a desire to participate in mediation;

34 mediation conferences have been held; 15 cases have been continued pending further negotiations

or have reached a non-foreclosure resolution through mediation;

93.33% of the cases which have been continued or resolved involved a housing counselor;

19 cases have proceeded on to judicial foreclosure, 90% of these due to failure of the homeowner to appear for scheduled mediation;

Overall, the Mediation Program has a 59.37% participation rate.

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SERVICER EVENTS

AND

OTHER OUTREACH

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Servicer Events

Quarterly eventsSince 2009 we have held over 25 workshops

bringing together lenders, homeowners, housing counselors, and representatives of the Attorney General’s Office

Workshops provide information about programs available to assist struggling homeowners

Facilitate on-site face to face meetings between homeowners and mortgage servicing banks

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Next Servicer Events

WEDNESDAY, NOVEMBER 14, 2012 Session #1

First State Community Action Center308 N. Railroad AvenueGeorgetown, DE 19947Outreach from 11:00am to 2:00pmEducational Presentation beginning at 12:45pm

Session #2Milford Senior Center111 Park Avenue, Milford, DE 19963Outreach from 5:00pm to 8:00pmEducational Presentation beginning at 6:30pm

THURSDAY, NOVEMBER 15, 2012 Sheraton Wilmington South

365 Airport RoadNew Castle, DE 19720Outreach from 11:00am to 8:00pmEducational Presentations at 12:30pm and 6:00pm

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Community Outreach

The Office of Foreclosure Prevention and Financial Education

Monthly town hall meetings in all three counties

Information and resources for struggling homeowners Review of assistance programs Information regarding loan modifications Tools to avoid foreclosure rescue scams

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ENFORCEMENT

INITIATIVES

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Mortgage Fraud

Scope of Enforcement Individual Mortgage Brokers Foreclosure Rescue Scams Improper Mortgage Servicing Activities Deceptive Practices related to the Ownership of

Mortgages Abuses related to the Securitization of Mortgages

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MERS Lawsuit

Allegations MERS obscures important information from borrowers and what is

available to borrowers is frequently inaccurate. MERS acts without authority MERS is a “front” organization that does not enforce its own rules

Settlement Terms Creating an easy way for homeowners to find out who owns their

mortgage. Reducing the chances of fraudulent foreclosures. Increasing the transparency of the foreclosure process. Improving the accuracy of MERS’ records. Increasing oversight and training.

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Bank of New York Mellon/Bank of America Litigation

Litigation in New York State Court seeking judicial approval of a proposed $8.5 billion settlement involving 530 different residential mortgage backed securities trusts

If approved, settlement would resolve investor claims related to breaches of the agreements governing the trusts at issue

Protecting the interests of unrepresented Delaware investors and homeowners and the integrity of the market as a whole

Additional transparency from the parties seeking judicial approval of the settlement

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Ongoing Enforcement Efforts

The Delaware DOJ continues to pursue cases in this area

Investigate allegations of improper conduct in the mortgage space

Use of national mortgage settlement funds to combat financial fraud

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National Mortgage Settlement

$26 billion settlementJoint state-federal investigationDelaware Department of Justice served on the

executive committee of investigating attorneys general

Settlement resolved claims related to improper mortgage servicing practices of five largest mortgage servicing banks in nation

Delaware’s share of settlement approximately $11.7 million

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National Mortgage Settlement

Funds to support: Enforcement Education and Outreach Mediation program

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Thank You!

Please feel free to contact me if you have questions. My contact information is below:

Gregory C. StrongDirector, Consumer Protection Unit

Deputy Attorney General820 N. French Street

Wilmington, DE 19801(302) 577-8504

Gregory.Strong@state.de.us

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